FTSE 100 falls from two-month high as pound strengthens

Sterling's gain came after reports Theresa May could reshuffle her cabinet and leave out Boris Johnson, who has been critical of her Brexit plans

By

Sara Sjolin

October 9, 2017 10:15 a.m. GMT

UK stocks slipped back on Monday, losing grip on a two-month high as the pound recovered slightly and miners dropped, MarketWatch reports.

The FTSE 100 index edged down 0.1% to 7,519.35, after closing at the highest level since August 8 on Friday. The London benchmark ended last week with a 2% gain — its biggest since December last year — after renewed turmoil in the governing Conservative Party sent the pound sharply lower.

But on Monday, sterling regained some lustre, trading at $1.3115, compared with $1.3069 late Friday in New York. The gain came after reports Prime Minister Theresa May could reshuffle her cabinet and leave out Foreign Secretary Boris Johnson, who has been critical of May’s Brexit plans.

“May’s disastrous speech at the Tory party conference last week has successfully caricaturized the dull atmosphere at the heart of the Conservatives and the way the Brexit negotiations have been handled so far,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group.

“Talks on cabinet reshuffle may have been a light hope for pound traders on Monday morning,” she said in a note.

Calls for the prime minister to step down increased last week after the Conservative’s annual conference, sparking fears of another snap, or early, election that could derail the Brexit negotiations. Infighting at the top of May’s party is already said to have slowed the exit talks with Brussels, as party members disagree on issues that are essential to move the negotiations forward.

North Korea tensions: Further away, tensions between the US and North Korea also hit trading in London. Gold prices rose 0.6% to $1,282.30 an ounce on Monday after President Donald Trump in a string of tweets over the weekend brought back fears of a nuclear standoff between the nations.

That boosted the UK-listed gold miners, with shares of Fresnillo up 0.9% and Randgold Resources 0.7% higher. Outside the main index, Hochschild Mining rallied 4.3%, and Acacia Mining picked up 3.6%.

Other miners, however, traded lower, partly held back by disappointing service sector activity data from China. The country is a major user of natural resources, so any indications that growth is slowing tend to hit the mining sector.

Shares of Anglo American lost 1%, Rio Tinto fell 0.8%, and Glencore gave up 0.7%.

Other stock movers: Shares of Smith & Nephew dropped 1.3% after the medical technology company said chief executive Olivier Bohuon will retire by the end of 2018.

On the FTSE 250 index, shares of Millennium & Copthorne Hotels soared 21% after Singapore’s City Developments said it has offered to buy the remaining share of the UK hotel chain it doesn’t already own.